Cogeco Inc. says it's eyeing the launch of mobile service in Canada after beginning to offer wireless coverage to customers in the U.S. last quarter under its Breezeline Mobile brand.
But the Montreal-based telecommunications company says details for the Canadian launch are still under wraps as it continues to negotiate access agreements with other companies to operate on their networks.
President and CEO Frédéric Perron told analysts on the company's third-quarter earnings call Friday that Cogeco plans to offer wireless services as part of a bundle with wireline products in the hopes of increasing customer retention.
“It's minimum investment and really the business case is on increasing customer retention on our wireline business and increasing new customer attraction from segments of customers that are shopping for a bundled offer that we could not attract before,” he said.
The wireless rollout in Canada has been in the works for more than a year, but the company has been mum on a timeline while it negotiates wholesale access to the airwaves through mobile virtual network operator (MVNO) agreements with other carriers.
Canada’s MVNO framework was put in place by the CRTC to allow telecoms to offer cellphone service through rival carriers’ networks. The rules are meant to increase cellphone competition by giving regional carriers a presence in regions they did not previously serve, with requirements to build their own networks in those areas within seven years.
In the U.S., Perron said Breezeline is also operating as an MVNO in the majority of the 13 states where it already offered broadband internet services.
“This capital-lean MVNO solution increases our addressable market, strengthens our product mix and will improve customer attraction, retention and satisfaction over time,” Perron told analysts.
“It is still too early to start disclosing detailed results on the product, but we will do so when it reaches critical mass.”
Chief financial officer Patrice Ouimet said the rollout south of the border is still limited, noting he doesn’t expect those services to generate “meaningful” revenue next year or contribute to Cogeco’s profitability. But he added Cogeco’s costs to offer the service are also low.
Cogeco reported a profit attributable to shareholders of $19.0 million for its third quarter, up from a loss of $34.5 million a year earlier. Revenue was $777.2 million, up from $767.6 million during the same quarter last year.
Perron said growth in Cogeco's Canadian telecommunications business was driven by the ongoing expansion of its internet subscriber base.
The firm's cable and internet subsidiary, Cogeco Communications Inc., reported profit attributable to shareholders of $70.4 million, down from $95.9 million a year earlier. Revenue for Cogeco Communications was $750.6 million, up from $741.8 million.
The third quarter also saw Cogeco implement the initial steps of a new operating model designed to deliver future growth.
Announced in May, the company's new organizational structure will combine its U.S. and Canadian telecommunications operations into one team, effective Sept. 1.
"This nimbler structure will help accelerate our performance and will generate cost savings, which will be reinvested in growth drivers, where we have historically under-indexed, such as marketing, digitization, and analytics to drive revenue," said Perron.
This report by The Canadian Press was first published July 12, 2024.
Companies in this story: (TSX:CGO, TSX:CCA)
Sammy Hudes, The Canadian Press
